39. FINANCIAL RISK MANAGEMENT POLICIES (CONT’D.) The policies in respect of the major areas of treasury activities are as follows: (cont’d.) (b) Credit risk Credit risk is the risk of financial loss to the Group and the Company if a customer or a counter party to a financial instrument fails to meet its contractual obligations and arises principally from the Group’s receivables from customers, cash and cash equivalents and other financial assets. The Group’s and the Company’s exposure to credit risks or the risk of counterparties defaulting arises mainly from various deposits and bank balances, receivables, deposits for aircraft purchase and derivative financial instruments. As the Group and the Company do not hold collateral, the maximum exposure to credit risks is represented by the total carrying amount of these financial assets in the balance sheet. Prepayment for engine maintenance to the service provider are also deemed by the Group as having credit risk in the event counterparties do not fulfil the obligation. Credit risks are controlled by the application of credit approvals, limits and monitoring procedures. Credit risks are minimised by monitoring receivables regularly. In addition, credit risks are also controlled as majority of the Group’s deposits and bank balances and derivative financial instruments are placed or transacted with major financial institutions and reputable parties. The Directors are of the view that the possibility of non-performance by the majority of these financial institutions is remote on the basis of their financial strength and support of their respective governments. The Group generally has no concentration of credit risk arising from trade receivables. (c) Liquidity and cash flow risk The Group’s and the Company’s policy on liquidity risk management is to maintain sufficient cash and cash equivalents and to have available funding through adequate amounts of committed credit facilities and credit lines for working capital requirements. Following the COVID-19 pandemic, the liquidity of the Group is impacted as it is influenced by the booking and payment pattern of passengers which saw a decline. Further details are as disclosed in Note 45. The management will continue to monitor liquidity reserves and rolling cash flow forecasts throughout the year based on the measures put in place as disclosed in Note 45 and also potential impact from events outside the Group’s control. 3 0 4 Notes to the Financial Statements (cont’d.) for the financial year ended 31 December 2021 C A P I T A L A B E R H A D
RkJQdWJsaXNoZXIy ODU0MjU5